HVBC 2016 Annual Report

HV Bancorp, Inc. and Subsidiary Notes to the Consolidated Financial Statements Years Ended June 30, 2017 and 2016 77 The following table summarizes the amounts recorded in the Company’s consolidated statements of income for derivative instruments not designated as hedging instruments for the year ended June 30, 2017 and 2016 (dollars in thousands): Consolidated Statements of Income Gain/(Loss) Presentation June 30, 2017 June 30, 2016 IRLCs Gain from hedging Instruments $ 368 $ 1,103 Forward loan sales commitments (Loss)/gain from hedging instruments (699) 52 TBA securities (Loss) from hedging instruments (6) (651) Total (loss) gain from hedging instruments $ (337) $ 504 10. Earnings per Share Earnings per share ("EPS") consist of two separate components: basic EPS and diluted EPS. Basic EPS is computed by dividing net income by the weighted average number of common shares outstanding for each period presented. The diluted EPS calculation reflects the EPS if all outstanding instruments convertible to common stock were exercised. There were no common shares outstanding for the year ended June 30, 2016. For the year ended June 30, 2017 and 2016, there were no stock options or other convertible instruments outstanding for either period. Therefore, there is no effect of dilution on the Company’s earnings per share The calculation of EPS for the year ended June 30, 2017 and 2016 is as follows (dollars in thousands, except per share data): For the Year Ended June 30, 2017(1) 2016 Net income $ 569 $ 1,026 Weighted average shares outstanding 1,010,354 N/A Net income per share – basic and diluted $ 0.56 $ N/A (1) The weighted average shares outstanding are calculated for the full periods presented and factor zero shares outstanding for the days prior to the conversion on January 11, 2017 11. Employee Benefits The Company adopted the Huntingdon Valley Bank Employee Stock Ownership Plan (the “ESOP”) for eligible employees. Eligible employees who have attained age 21 may participate in the ESOP on the later of the effective date of the ESOP or upon the first entry date commencing on or after the eligible employee’s completion of 1,000 hours of service during a continuous 12-month period. The ESOP trustee purchased, on behalf of the ESOP, 8% of the total number of shares of HV Bancorp common stock issued in the offering. The ESOP funded the stock purchase with a loan from HV Bancorp equal to the aggregate purchase price of the common stock. The loan will be repaid principally through Huntingdon Valley Bank’s contribution to the ESOP and dividends payable on common stock held by the ESOP over the anticipated 20-year term of the loan. The interest rate for the ESOP loan is an adjustable rate equal to the prime rate, as published in The Wall Street Journal, beginning on the closing date of the conversion. Thereafter the interest rate will adjust annually and will be the prime rate on the first business day of the calendar year, retroactive to January 1 of such year. The collateral for the loan is the common stock of the Company purchased by the ESOP. The trustee will hold the shares purchased by the ESOP in an unallocated suspense account, and shares will be released from the suspense account on a pro-rata basis as the loan is repaid. As shares are released from collateral, the Company recognizes compensation expense equal to the average market price of the shares during the period